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FOR IMMEDIATE RELEASE
WEDNESDAY, MARCH 4, 1998

AT
(202) 616-2771
TDD (202) 514-1888

ROCHESTER GAS & ELECTRIC AGREES TO SETTLE ANTITRUST SUIT

WASHINGTON, D.C.-- The Department of Justice has reached an
agreement with Rochester Gas & Electric Company (RG&E) that will
allow the University of Rochester to produce and sell low cost
electricity in competition with RG&E.

The settlement, filed on February 20, 1998 in U.S. District
Court in Rochester, resolves a Justice Department complaint
challenging an earlier agreement RG&E had reached with the
University that prevented the University from replacing its
aging, coal-burning, steam plant with a new, efficient power
plant. In addition to invalidating RG&E's agreement with the
University, the settlement prohibits RG&E from entering into
similar agreements with other competitors, including companies
with the potential to compete with RG&E in producing electricity
sometime in the future.

Joel I. Klein, Assistant Attorney General in charge of the Antitrust
Division, said, "The settlement is good for consumers and businesses
in Rochester. It ensures that RG&E will not, now or in the future,
deprive them of the benefits of price competition in the retail sale
of electricity. This settlement also sends a clear message to electric
utilities throughout the country that their conduct must conform to
the antitrust laws."

The settlement followed shortly after a federal judge in
Rochester rejected RG&E's claim that its conduct was exempt from
the antitrust laws under the "state action doctrine." This
doctrine protects private companies from antitrust liability when
their conduct is specifically authorized and closely supervised
by the state. On February 17, the Court denied RG&E's motion for
summary judgment, holding that "the New York Public Service Law
does not permit a utility to offer discounts to a potential
competitor in return for that competitor's promise not to
compete."

The Department's complaint, filed on June 24, 1997, in U.S.
District Court in Rochester, alleged that RG&E encouraged the
University to enter the anticompetitive agreement by threatening
to cut off certain research grants, promising to pay hundreds of
thousands of dollars for conservation programs even if the
University did not undertake them, and offering an exceptionally
low electricity rate. At the time, the University's trustees had
voted to build a "cogeneration" plant, which would have produced
electricity as a byproduct of producing steam for heating and
cooling campus buildings at a negligible additional cost. The
complaint alleged that the new plant would have produced
inexpensive, surplus electricity that under New York law the
University could have sold in competition with RG&E.

As required by the Antitrust Procedures and Penalties Act,
the proposed settlement, along with the Department's Competitive
Impact Statement, will be published in the Federal Register. Any
person may submit comments on the proposed decree within sixty
days to Roger Fones, Chief, Transportation, Energy and
Agriculture Section, Antitrust Division, U.S. Department of
Justice, 325 7th Street, N.W., Suite 500, Washington, D.C.
20303-0001. At the conclusion of the comment period, the Court
may enter the final judgment upon finding, following review of
the comments received, that it serves the public interest.